The hidden $100,000 cost you have to pay on top of your mortgage. And what to do about it
Saturday, 24 January 2026
The inflation figures this week offered yet another sobering reminder of the energy burden the average household carries in this country.
Electricity costs were up a staggering 12.2% in the December quarter, according to the latest figures from Statistics New Zealand.
The striking thing about this is that an energy bill is something we simply have to pay. It isn’t our morning coffee treat, a discretionary item we can easily opt out of buying for a few weeks.
To keep the lights on and the kids fed, the average New Zealand household uses approximately 7,200 kWh, which can become as high as 10,000 kWh per annum when you factor in gas and alternative forms of heating.
And this doesn’t come cheap. That average family will be spending roughly $2,426 per year on electricity costs – even more if you’re a large family, love the soothing drum roll of a tumble dryer or cook elaborate meals regularly.
I asked Dave Karl, the policy director at Rewiring Aotearoa, what that would come to over the course of a 30-year mortgage, and his response was flabbergasting.
Accounting for a conservative inflation rate of around 2% per annum, you’re looking at a cost of $94,000 by the end of your mortgage period for a lower-end average user.
Push that inflation rate up to 3% for a user who requires a bit more energy, and you’re looking at a cost as high as $166,000.
This is essentially a hidden cost that sits on top of your mortgage as the bare minimum just to keep your household running.
The important thing to note here is that this expense doesn’t go away once your house is paid off. It will continue to eat into your wages until your lights finally go out.
Reducing that cost
Tinkering around the edges by reducing usage will help to moderate the bill, but it won’t make you immune to the impact of inflation.
According to Karl, a better approach is to reduce your dependency on traditional energy providers.
Karl says a few things have happened in the decade that have shifted solar from being a luxury expense to a smart investment.
He says the price of domestic solar panels has reduced rapidly, and battery technology has also advanced quickly and become more affordable.
This makes solar more accessible and effective than it has ever been in history.
So, how much could a solar system cut off that $94,000 bill over the course of that 30-year period.
For the sake of argument, Karl says that if you were gifted a 9kW solar system, a household could expect to save just over $71,000 (including electricity export credits, which are attained for putting power back to the grid).
Of course, most of us aren’t in that position, which means we would have to purchase a system and a decent battery.
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Karl says a decent system, capable of delivering those cost savings, would set you back around $19,600. You would then also have to acquire a battery system, with the price varying depending on the size you opt for.
With prices plummeting in recent years, you can today get a large 10-13kWh battery (like a Tesla Powerwall 3 or similar) for $14,000–$18,000 fully installed.
Factoring in the cost of the system, Karl estimates that a family would be as much as $37,000 better off at the end of that 30-year period. And the savings would keep coming in the years that followed.
This is part of the reason why solar adoption in Australia has skyrocketed in recent years, with 40% of their homes now having a system installed.
In New Zealand, that number sits at a measly 4%.
Banks stepping up
Those who don’t have the upfront costs to cover a solar system could tap into one of the Green Loans currently offered by New Zealand’s major banks.
A spokesperson from ANZ explains that they have, since 2022, enabled eligible customers with an existing home loan to borrow up to $80,000 at a three-year fixed interest rate of 1% for upgrades to make their home more energy efficient or better for the environment.
The product has proven popular, with more than 21,000 customers drawing on more than $850 million to make improvements to their homes.
A spokesperson from BNZ tells a similar story, saying that in the 2025 financial year alone, more than 3,380 customers tapped into their Better Future Home Loan (also offered at a 1% interest rate for three years) to improve their homes – an increase of 46% on previous years.
“The growth tells us more New Zealanders are looking for practical ways to take control of their energy costs and future-proof their homes,” the BNZ spokesperson said.
The thing to note here is that banks aren’t making a margin on these 1% loans. You need only look at the current inflation rate of 3.1% to know that this isn’t exactly a great deal for the bank.
The only time the bank will start to make money is if you don’t pay off your loan in that three-year period.
Those who do not pay off their loan will see the outstanding amount revert to the bank’s standard floating rate or re-fixed at an available fixed rate.
The watch-out
These loans are a solid way to get access to the funds necessary to install a solar system, but you need to proceed with caution.
Katie Wesney, the head strategic coach at Enable Me, tells me that these loans “can be excellent” but only if you approach them strategically.
“The key is doing two things,” she says.
“The first is being productive with the difference that a lower rate makes in creating breathing room. You need to use that breathing room to build savings or pay down other debt. And secondly, you need a clear plan for when the promotional period ends. You need the ability to either pay out the balance or comfortably absorb the higher interest rate when it kicks in. The trap is treating that 1% rate as permanent and not preparing for the inevitable step-up.”
If you don’t do these two things, then any loan, regardless of the interest rate, will turn into a challenging debt burden.
“If you can’t genuinely afford the loan at the higher rate, or you’re not disciplined about using the savings period wisely, you’ll end up worse off than if you hadn’t taken the loan from the start. It’s a tool that rewards planning, not wishful thinking.”